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TICKERS: VOL; VLTTF

Drone Co.'s Services Extend With Federal Approval
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Volatus Aerospace's authorization from the Federal Aviation Administration will let it attain revenues from the sale, charter, or operational support of agricultural drones, as well as recurring revenues from its operation, management, and maintenance, according to an Echelon Capital Markets report.

Volatus Aerospace Corp. (VOL:TSX; VLTTF:OTCQB) announced that it has received authorization from the Federal Aviation Administration (FAA) in the U.S. to conduct commercial agricultural operations using drones, noted Echelon Capital Markets analyst Rob Goff in a February 20 research note.

This approval, along with the FAA Part 137 authorization, will let the company attain revenues from the sale, charter, or operational support of agricultural drones, as well as recurring revenues from its operation, management, and maintenance.

Goff highlighted the significance of this authorization for VOL's growth prospects.

"This removes the regulatory friction currently experienced by VOL's agriculture customers during the sales process and allows leasing options to its ~1,200 pilot network in the U.S.," Goff stated. "The authorization (after roughly one year's efforts) supports our bullish view on management's stewardship and its ability to build out a CA$45M+ revenue run rate of recurring and highly reoccurring business in 2024."

Goff pointed out that the FAA approval permits VOL's subsidiary, Volatus Aerospace USA Corp., to operate approved drones weighing 55 pounds (25kg) or more for agricultural purposes under FAA Part 137 regulations. This allows VOL to train and contract customers to use its drones under its commercial program. This will limit the regulatory burden and give VOL a recurring revenue stream.

"This is even more favorable as the approval process is tedious and lengthy and, therefore, is a common deterrent for most customers to undergo the regulatory process. Only about 10-15 of its competitors have been granted this license," Goff noted.

Furthermore, Goff stated that this approval, coupled with Volatus' Special Flight Operating Certificate in Canada (announced in May 2023), allows the Company to extend these services to large-scale clients in agriculture, forestry, and environmental management.

The agricultural drone market is expected to grow at a CAGR of 31.5%, reaching a value of CA$17.9B by 2028 from CA$4.5B in 2023, according to a MarketsandMarkets shared by Echelon. Drones offer a lower cost, more effective, and green alternative to existing methods of spraying crops, which utilize large tractors or traditional manned aircraft.

"The company estimates that it can cover 400 acres per day with drone spraying technology," Goff added.

Goff maintained his forecasts for VOL, expecting Q423 revenue/gross profits/EBITDA at CA$8.0M/CA$2.6M/(CA$0.7M) and Q124 revenue/gross profits/EBITDA at CA$10.3M/CA$3.2M/($0.6M). For the full year 2024, the analyst forecasts revenue of CA$53.8M, gross profits of CA$16.7M, and EBITDA of CA$1.8M.

"We forecast a modest free cash flow drain of roughly CA$0.7M for 2024, although subject to WC moves. With available capital at attractive terms, we could envision a material positive recalibration of forecasts," Goff stated.

Echelon Capital Markets maintains a Speculative Buy rating on Volatus Aerospace Corp. with a target price of CA$0.68.


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Important Disclosures:

  1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Volatus Aerospace Corp.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for Echelon Capital Markets, Volatus Aerospace Corp., February 20, 2024

Echelon Wealth Partners Inc. is a member of IIROC and CIPF. The documents on this website have been prepared for the viewer only as an example of strategy consistent with our recommendations; it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. Echelon Wealth Partners Inc. cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. Echelon Wealth Partners Inc. employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients. Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.

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For U.S. persons only: This research report is a product of Echelon Wealth Partners Inc, under Marco Polo Securities 15a-6 chaperone service, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. Research reports are intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a-6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Echelon Wealth Partners Inc. has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo"). Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

U.K. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. ECHELON WEALTH PARTNERS INC. IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.

Copyright: This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of Echelon Wealth Partners.

ANALYST CERTIFICATION Company: Volatus Aerospace Corp.| VOL-TSX I, Rob Goff, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.

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Does Echelon Wealth Partners Inc. and/or one or more entities affiliated with Echelon Wealth Partners Inc. beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer? Yes

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